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Slovakia and Ukraine signed Framework Interconnection Agreement on gas supply

Apr 29, 2014 12:50 IST

Slovakia and Ukraine signed a Framework Interconnection Agreement on gas supply on 28 April 2014. The deal signed in Bratislava, allows supply of gas from Central Europe to Ukraine via Slovakia.

The agreement signed between Slovakian company Eustream and the Ukrainian company Ukrtransgaz was brokered by the European Commission.

As per the agreement, the gas will be supplied to Ukraine through disused Vojany pipeline at Velke Kapusany, Slovakia. The pipeline is capable of supplying 8 billion cubic metres (bcm) of gas to Ukraine in a year. Once the pipeline is fully constructed and restored by April 2015, the pipeline will become capable of supplying 22 million cubic meters of gas a day.

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Significance of the Agreement
The successful implementation of gas flows from the EU to Ukraine will allow Ukraine to access various gas sources. For instance, Ukraine will have Norwegian gas or liquefied natural gas (LNG) from the global markets at competitive prices.

It will help reduce Ukrainian dependence upon Russia for gas supply and add to Ukraine’s effort in diversifying its sources of gas supply. In April 2014, German energy firm RWE began deliveries of gas via Poland which can supply up to 10 bcm of gas a year.

It will lead to greater unification of Ukraine with the European Union economically, politically and strategically.

It will help Ukraine overcome the current economic and financial woes.

However, as a member of the Energy Community, Ukraine will have to ensure the implementation of the EU internal energy market legislation. The approximation of the Ukrainian legal and regulatory framework is a requirement for higher confidence of investor and could lead to a better use of Ukraine’s immense gas infrastructure.

Background
The Agreement came against the backdrop of Russian firm, Gazprom doubling the gas prices to Ukraine since Russia annexed Crimea in February 2014. Ukraine owes Gazprom 2.2 billion dollars for supplies of gas. Ukraine have refused to pay the double price and looking for the alternatives to the Russian firm, Gazprom.

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